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Institutional Investors’ Ownership Stability and Their Investee Firms’ Equity Mispricing

Institutional Investors’ Ownership Stability and Their Investee Firms’ Equity Mispricing
Institutional Investors’ Ownership Stability and Their Investee Firms’ Equity Mispricing
This study examines the impact of institutional investors' equity ownership stability and their investment horizon to determine the impact on their investee firms' equity mispricing. Mispricing represents the difference between a firm’s market and fundamental values. We treat institutional investors as a heterogenous group, i.e., dedicated, transient, or quasi-indexer as defined by Bushee, 1998, Bushee, 2001 since their categorization determines their trading strategy. Higher institutional ownership, higher stability in institutional investors' equity ownership, and institutional investors classified as long-term are all associated with lower equity mispricing at investee firms.
Equity mispricing, Institutional investors
1062-9408
Sakaki, Hamid
469ee780-9237-4969-950c-6b96c2113d42
Jory, Surendranath
2624eb24-850a-48f6-b3c6-c96749b87322
Jackson, Dave
4665bf03-ec72-4be7-b50d-e543533b8e64
Sakaki, Hamid
469ee780-9237-4969-950c-6b96c2113d42
Jory, Surendranath
2624eb24-850a-48f6-b3c6-c96749b87322
Jackson, Dave
4665bf03-ec72-4be7-b50d-e543533b8e64

Sakaki, Hamid, Jory, Surendranath and Jackson, Dave (2021) Institutional Investors’ Ownership Stability and Their Investee Firms’ Equity Mispricing. The North American Journal of Economics and Finance, 57, [101440].

Record type: Article

Abstract

This study examines the impact of institutional investors' equity ownership stability and their investment horizon to determine the impact on their investee firms' equity mispricing. Mispricing represents the difference between a firm’s market and fundamental values. We treat institutional investors as a heterogenous group, i.e., dedicated, transient, or quasi-indexer as defined by Bushee, 1998, Bushee, 2001 since their categorization determines their trading strategy. Higher institutional ownership, higher stability in institutional investors' equity ownership, and institutional investors classified as long-term are all associated with lower equity mispricing at investee firms.

Text
March_2021_INSTITUTIONAL INVESTORS AND EQUITY MISPRICING - Accepted Manuscript
Restricted to Repository staff only until 19 April 2023.
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More information

Accepted/In Press date: 13 April 2021
Published date: 19 April 2021
Keywords: Equity mispricing, Institutional investors

Identifiers

Local EPrints ID: 448859
URI: http://eprints.soton.ac.uk/id/eprint/448859
ISSN: 1062-9408
PURE UUID: fbe9ac86-8a20-4f64-8841-2b62c3f581f6
ORCID for Surendranath Jory: ORCID iD orcid.org/0000-0002-8265-0001

Catalogue record

Date deposited: 07 May 2021 16:30
Last modified: 28 Apr 2022 02:08

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Contributors

Author: Hamid Sakaki
Author: Dave Jackson

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